Direct Material Input Chemical Mix Variance Yield Variance Efficiency Variance Purchase Price Variance Chem-A Chem-B Chem-C Total
Direct Material Input Chemical Mix Variance Yield Variance Efficiency Variance Purchase Price Variance Chem-A Chem-B Chem-C Total
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Question
![Plano Products manufactures a wide variety of chemical compounds and liquids for industrial uses. The standard mix for producing a
single batch of 100 liters of its biggest selling product is as follows.
Cost
(per liter)
$15
Input
Quantity
(in liters)
Total
Chemical
Cost
Chem-A
23
345
Chem-B
63
15
945
Chem-C
39
18
702
125
$1,992
There is a standard 20 percent loss in liquid volume during processing due to evaporation. The finished liquid is put into 13-liter
containers for sale. Thus, the standard material cost for a 13-liter container is $258.96 [= ($1,992 100 liters) x 13 liters per container].
The actual quantities of direct materials and the cost of the materials placed in production during September were as follows (materials
are purchased and used at the same time).
Quantity (in
liters)
Input
Chemical
Chem-A
Chem-B
Total Cost
$ 284, 248
19,360
48,900
732,320
35,540
103,800
Chem-C
988,220
$2,004,788
A total of 8,300 containers (107,900 liters) were produced during September.
Required:
Calculate the total direct material variance for the liquid product for the month of September and then further analyze the total
variance into:
a. & b. Materials price and efficiency variances and materials mix and yield variances. (Do not round intermediate calculations. Round
"Standard mix values" to 3 decimal places. Indicate the effect of each variance by selecting "F" for favorable, or "U" for
unfavorable. If there is no effect, do not select either option. Enter your answers rounded to the nearest whole number.)
Direct Material
Input Chemical
Mix Variance
Yield Variance
Efficiency Variance
Purchase Price Variance
Chem-A
Chem-B
Chem-C
Total](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc172220c-b8c6-4fe6-be57-f2666808bc01%2F47fc17d3-48d4-44af-8073-5515705de5e3%2Fplkj22o_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Plano Products manufactures a wide variety of chemical compounds and liquids for industrial uses. The standard mix for producing a
single batch of 100 liters of its biggest selling product is as follows.
Cost
(per liter)
$15
Input
Quantity
(in liters)
Total
Chemical
Cost
Chem-A
23
345
Chem-B
63
15
945
Chem-C
39
18
702
125
$1,992
There is a standard 20 percent loss in liquid volume during processing due to evaporation. The finished liquid is put into 13-liter
containers for sale. Thus, the standard material cost for a 13-liter container is $258.96 [= ($1,992 100 liters) x 13 liters per container].
The actual quantities of direct materials and the cost of the materials placed in production during September were as follows (materials
are purchased and used at the same time).
Quantity (in
liters)
Input
Chemical
Chem-A
Chem-B
Total Cost
$ 284, 248
19,360
48,900
732,320
35,540
103,800
Chem-C
988,220
$2,004,788
A total of 8,300 containers (107,900 liters) were produced during September.
Required:
Calculate the total direct material variance for the liquid product for the month of September and then further analyze the total
variance into:
a. & b. Materials price and efficiency variances and materials mix and yield variances. (Do not round intermediate calculations. Round
"Standard mix values" to 3 decimal places. Indicate the effect of each variance by selecting "F" for favorable, or "U" for
unfavorable. If there is no effect, do not select either option. Enter your answers rounded to the nearest whole number.)
Direct Material
Input Chemical
Mix Variance
Yield Variance
Efficiency Variance
Purchase Price Variance
Chem-A
Chem-B
Chem-C
Total
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